#1 ~ Market Segmentation

Nicolette Ford

Hello and welcome to the first proper episode of Bots & Brains, the intelligent marketing podcast from Social Matrix. If you missed our little intro episode, you might wanna pop back and give that a listen—it's a good one, promise. Today, we're diving straight into the world of market segmentation—what it is, why it matters, and honestly, how it can totally transform your marketing. Lorraine, are you with me?

Lorraine Windsor

Oh, absolutely, Nic. I mean, market segmentation, it sounds a bit, you know, textbook-y, but honestly, it's the difference between shouting into the void and actually having people listen to you. And, hopefully, buy from you! It's one of those topics that gets overlooked but is absolutely game-changing, especially for small businesses. You can't afford to waste time or money, so you've gotta make every minute and every pound count.

Nicolette Ford

Exactly. And you might be wondering what segmentation even is, but don't worry, we'll break it down in plain English. Let's start with a scenario that might sound familiar… You spend hours crafting the perfect social media post, maybe even boost it with a bit of your hard-earned money, and then nothing. A couple of likes from friends, maybe one vague, but basically rubbish, enquiry. It's frustrating as hell.

Lorraine Windsor

Totally. And in most cases, it's not your product or your post causing the tumbleweed, it's that you're trying to speak to everyone at once. That rarely works, because when you try to appeal to everyone, your message just gets diluted. It's like being at a party and trying to have a conversation with the entire room instead of connecting with the people who actually care about what you've got to say.

Nicolette Ford

That's where market segmentation comes in. Simply put, it's dividing your big, broad target market into smaller groups of people who share something meaningful in common. Could be their age, where they live, what they value, how they shop, or a mix of all of that.

Lorraine Windsor

Exactly. And it helps answer one of the most important questions in marketing—“Who is my ideal customer?” Because, let's be honest, all buyers are not the same. They differ in what they want, how much they're willing—or able—to spend, where they live, their habits, their attitudes, everything. When you understand these differences and group people accordingly, you can tailor your products, services, and messaging to match what each group actually needs.

Nicolette Ford

And this approach sets the foundation for your entire marketing strategy. Market segmentation is the first step in what we call the STP model—Segmentation, Targeting, and Positioning. First, you identify groups with common characteristics. Then, you choose which of those groups to focus on. And finally, you position your offer in a way that speaks directly to them. It's actually pretty simple, but so many small businesses get it wrong every day, which means they're wasting time and money on the wrong things.

Lorraine Windsor

Without segmentation, you're basically guessing who might want your product. But with it, your messaging becomes sharper, your offers feel more relevant, and every pound you spend on marketing starts working better. That reminds me, I was working with someone running ads for their guitar classes. At first, they just targeted everyone in South East London aged 18 to 65 who might be interested in music. We've all done it. The results were, well, pretty disappointing, as you can imagine. But then we got them thinking differently. Instead of casting this wide net, what if they focused specifically on local musicians who were already active on the scene? So they tweaked their ads to mention local jam nights, open mic venues, and even name-dropped a few popular music pubs in the area. Suddenly, they were getting way more interest and actual bookings. The right people saw themselves in the ad and thought, "This company gets it."

Nicolette Ford

That's a great example of how segmentation helps you speak your customers' language. And once you start thinking this way, you begin to understand what really motivates different groups, what they care about, and what problems they're trying to solve. That's when your marketing starts to feel personal to people, instead of just generic noise.

Lorraine Windsor

And that's how you build loyalty, too. When people feel like you "get" them, they stick around.

Nicolette Ford

Now, you might be wondering why this approach matters for your business. Lorraine, can you walk us through the main reasons segmentation makes such a difference?

Lorraine Windsor

Absolutely. Let's be honest—running a business, especially a small one, means juggling time, money, and energy, constantly. Segmentation helps you direct those precious resources where they'll actually pay off. First, it gives you much clearer customer insights. Instead of guessing what people want, you start seeing what different types of customers really care about when they're making buying decisions.

Nicolette Ford

Yes. Rather than trying to appeal to everyone and diluting your message, segmentation helps you speak directly to the people who are most likely to buy. This means better results from every campaign, every social media post, every pound you spend. Even if you don't do paid ads, your time still has a value, right? So, you should spend that commodity wisely, and waste as little as possible doing the wrong things, or employing the scatter gun approach.

Lorraine Windsor

It also gives you a real competitive advantage. You might not have the marketing budget of a massive corporation, but you can be more specific and targeted. For example, for families dealing with seeliak disease looking for safe gluten-free treats, you can become the obvious choice for them, not just another option.

Lorraine Windsor

And finally, it helps you plan much smarter. From deciding which products to stock, to figuring out your staffing schedule, or when to run your ads, you're basing decisions on what your key customer groups need, not just hoping for the best.

Nicolette Ford

And let's be honest, it's just more rewarding when your marketing actually works. Nothing's worse than spending hours on a campaign and getting, like, two likes from your mum and your best mate. We've all been there! My mum is our biggest fan!

Nicolette Ford

Now that we understand why segmentation is so powerful, let's explore how you can put it into practice. There are five main ways to segment your market: demographic, geographic, psychographic, behavioural, and, if you're selling to other businesses, firmographic.

Lorraine Windsor

Perfect! I wasn't sure you were gonna remember all of those. Let's start with the one most people are familiar with... Demographic segmentation. This is where you divide people by characteristics like age, gender, income, education level, and family situation. This approach gives you a practical starting point because these traits are relatively easy to identify and measure, right? For instance, if you're running a fitness studio, you might create special low-impact classes for people over 60, and promote them through local senior groups. Or a luxury watch brand might focus its advertising on high-income professionals over 40. Demographics are useful because they often correlate with purchasing power and lifestyle needs.

Nicolette Ford

Right, and it’s a good starting point because, as you said, these traits are easy to measure and, well, they often give you a quick sense of who your audience is. But, demographics only go so far. They tell you the who, not the why.

Lorraine Windsor

Exactly. Like two people earning the same income might have completely different tastes. Let's move on to the next type of segmentation—geographic.

Nicolette Ford

Geographic segmentation can be really valuable, especially if you have a physical location or deliver to specific areas. This is about understanding where your customers live, work, or spend their time. Let’s say you’re a florist in Bristol. Knowing which postcodes your customers will travel from—or whether they need same-day delivery—becomes crucial for planning your service area and marketing spend.

Lorraine Windsor

Or, let's say you're a café chain with branches in different areas. This means you might run completely different promotions for each location. The branch near the university gets student discount ads, while the one in the business district promotes grab-and-go breakfast deals for commuters. Makes sense, right?

Lorraine Windsor

Totally. And that brings us to my personal favourite: psychographic segmentation. This is all about understanding people's values, interests, lifestyle, and personality. It's that emotional connection that makes customers think, "This brand really gets me." This is where you can build genuine loyalty.

Nicolette Ford

If you're selling eco-friendly products, you want to connect with people who genuinely care about sustainability and environmental impact, not just anyone with disposable income. The messaging that resonates with environmentally conscious consumers will be completely different from what appeals to convenience-focused shoppers.

Lorraine Windsor

And this is where you can get really creative with your marketing. For example, a meal prep business might discover they have two distinct groups: health-focused individuals who want clean eating solutions, and busy families who just need quick, nutritious dinners. The way you communicate with each group—your email subject lines, your social media content, even your packaging—can be tailored to match their specific mindset and priorities.

Nicolette Ford

That really shows how powerful it is to match your message to someone’s mindset. But mindset isn’t the whole story—what people actually do can be just as telling. That’s where behavioural segmentation comes in.

Lorraine Windsor

Yes, behavioural. This segmentation focuses on what people do. For example, how often they buy, when they engage with your brand, and whether they're loyal customers or bargain hunters. It's less about who they are on paper and more about their actual actions and patterns.

Nicolette Ford

Like, for example, a skincare brand might notice that some customers religiously reorder every six weeks, so they could offer a convenient subscription service. Others might only purchase during sales, so they get early access to discount events. You're responding to real behaviour patterns rather than making assumptions. There's a good bit of segmentation, right there!

Lorraine Windsor

Exactly! Let me share a perfect example of behavioural segmentation in action. I worked with a local gym that was struggling with member retention. They had loads of data about class bookings, peak usage times, and membership patterns, but they weren't using it strategically.

Nicolette Ford

What did you find out?

Lorraine Windsor

I found two very distinct behavioural patterns. There were beginners who would sign up enthusiastically but often felt intimidated and drop out after a few weeks. Then there were regular fitness enthusiasts who came consistently but wanted more challenge and recognition for their progress. The beginners would book intro classes, but their attendance would taper off quickly. The regulars were coming 4-5 times a week, always booking the same advanced classes, and staying much longer than average. Now, here's where behavioural segmentation gets really powerful—once I understood these patterns, I needed to dig deeper. Because what they were doing was clear, but I still needed to understand the why behind these behaviours. And that's where I moved into psychographic territory.

Nicolette Ford

So you went beyond just the usage data?

Lorraine Windsor

Exactly. The behavioural data showed what people were doing, but it was the psychographic side that explained why. The beginners wanted more than just to get fit—they needed to feel supported and to build confidence. And the regulars were looking for a challenge—something that made them feel proud and part of a community.

Nicolette Ford

And I'm guessing you created targeted marketing campaigns that addressed both the behaviours and the underlying motivations?

Lorraine Windsor

Yes! For the beginners, they introduced "Start Strong"—a supportive programme with dedicated beginner-friendly classes, simple progress tracking, and lots of encouragement. For the regulars, they created advanced challenges with leaderboards, progress shoutouts on social media, and exclusive "member achievements" recognition. Beginner retention improved significantly, and the regular members became even more engaged because they felt their dedication was noticed and celebrated.

Nicolette Ford

This is a perfect example of how behavioural and psychographic segmentation work hand-in-hand. Now, let’s move to the last type of segmentation—for those who are selling to other businesses, firmographic segmentation. This is like demographics, but for companies, right?

Lorraine Windsor

Yes, exactly. So, if you're selling to other businesses rather than individual consumers, firmographic segmentation becomes your go-to approach. Here, you look at industry, company size, annual revenue, location, and business structure. This is crucial because you definitely don't want to pitch the same solution to a five-person startup and a multinational corporation. Their needs, decision-making processes, budgets, and timelines are completely different.

Nicolette Ford

So, how do you choose which type of segmentation to use?

Lorraine Windsor

The key is to think about what actually influences how your customers make buying decisions.

Nicolette Ford

Yup! That's the place to start.

Lorraine Windsor

Yes, because not every segment is worth pursuing. We use what's called the MAD criteria to evaluate whether a segment makes business sense. Your segments need to be Measurable, Accessible, and Durable—in other words, profitable long-term. Just for a bit of clarity, 'measurable' means you can identify the people in that segment and get a rough idea of how many there are. 'Accessible' means you can actually reach them through your marketing, whether that’s social media, email, ads, or whatever. 'Durable' means the segment is stable and big enough to be worth your time; they’ve got the interest, the buying power, and they’re not just a passing trend.

Nicolette Ford

Exactly. If you can't measure a segment, reach them effectively, or if there simply aren't enough potential customers to justify the effort, then it's probably not the right focus for your resources. Focusing on the wrong thing really IS MAD. I always recommend starting with whatever factors most directly affect how people buy from you. If you're a local bakery, then geography and family size probably matter more than job titles. If you're selling business software, then company size and industry are likely to be more relevant than personal hobbies.

Lorraine Windsor

And don't be afraid to combine different types of segmentation for a fuller picture of your customers.

Nicolette Ford

Yeah, and also, don't try to target everyone. That's just a recipe for wasted money and a headache. MADness. Trust us, we've both done it and learned the hard way.

Nicolette Ford

So now that we understand the different approaches to segmentation, let's talk about the practical side. How do you gather the data you need to make segmentation work for your business? This is where people often get overwhelmed, thinking they need expensive software or complex analytics. But honestly, you can start with the basics. Your booking system, order history, and email list—even simple information like customer age, location, or purchase frequency can reveal useful patterns.

Lorraine Windsor

And if you want to dig deeper or you're just starting out, a short customer survey can be invaluable. You can ask practical questions like "Are you buying this for yourself or your family?" or "What's most important to you when choosing our product?" You can use free tools like Google Forms or add questions to your Mailchimp signup. There's really no barrier to entry.

Nicolette Ford

And don't overlook your website analytics. Even the free version of Google Analytics can show you where visitors are coming from, which pages they spend time on, what devices they're using, or what time of day they visit. That kind of insight is gold when you're trying to understand your audience.

Lorraine Windsor

Social media and customer reviews are also great sources of information. Your customers are often telling you what matters to them—you just need to listen. Check Facebook comments, Instagram DMs, Google reviews, and even your competitors' reviews to understand what people care about.

Nicolette Ford

This applies to B2B businesses too. If you're selling to other companies, resources like Companies House, LinkedIn company searches, or industry directories can give you firmographic insights about company size, industry, and location. It doesn't have to be complicated or expensive, and, of course, if you have time constraints, there are always companies like ours that can help.

Nicolette Ford

I think that's a perfect place to wrap up our discussion for today. So, market segmentation—it's not about making your marketing more complicated, but about making it more human, more focused, and more effective. When you understand who your customers are, and what they need, everything else becomes clearer.

Lorraine Windsor

Absolutely. And to everyone listening—start small, use the data you already have, and don't be afraid to experiment. The insights you gain will transform not just your marketing but your entire approach to serving your customers.

Nicolette Ford

We hope you've got some practical ideas to try out with your own business. We'll be back soon with more strategies to help you find your people and grow your business. Lorraine, thanks for another brilliant chat.

Lorraine Windsor

Thank you, Nic. Always a pleasure. And thanks to everyone for tuning in. Take care, and see you next time on Bots and Brains, the intelligent marketing podcast by Social Matrix!